A health-care blow to the self-employed

Being a self-employed consultant has its perks and its drawbacks. On the upside, my work follows me wherever I go, provided I have Internet access. On the downside, there is no job security and currently I have not had any paid work in four months. I am a "live within my means" kind of woman, have never run up my credit cards and have always loved finding hidden treasures on the racks at Goodwill. Last month, I moved back to my parents' home. I would have walked away from my last consultancy with a modest cushion to hold me through this lull save one unanticipated cost: my teeth.

Because I am self-employed, I have to buy my health insurance out of pocket using after-tax dollars, compared with those who get health insurance at work and aren't taxed for the benefit. My situation reflects a rapidly increasing trend in our economy, in which companies use consultants more frequently, sparing them the obligation of providing benefits. This effectively shunts the burden of health care onto the individual. By some measures, 26 percent of the U.S. workforce is self-employed; this includes software developers, writers and consultants like myself.

So when I set out to purchase health insurance as an individual, I was severely disadvantaged because I didn't have the ability to negotiate with an insurance company in the way that Best Buy or other companies with lots of employees can. The limitations of my coverage didn't become clear until I stopped in for a checkup at my dentist. Thirty minutes later, I walked out with the horrifying news that I needed immediate and expensive work. Because my dental coverage wouldn't kick in for seven months, I had to either forgo the necessary procedures or pay out of pocket. Six thousand dollars later, I have healthy teeth and an empty bank account.

To my added chagrin, I only just learned about the Freelancers Union, a Brooklyn-based nonprofit that works to help the self-employed obtain better coverage by pooling them together into a much larger negotiating bloc. This allows them to drive down premiums to buy health insurance and retirement funds. Importantly, the plans move with consultants from project to project. After crunching the numbers, I realized that its coverage would have saved me thousands of dollars, or 68 percent off my bill. New York Mayor Michael Bloomberg recently described more bluntly the risks faced by a quarter of our workforce: "Freelancers lack any safety net to fall back on during hard times. . . . [I]f a company lays you off, you can collect unemployment. But if you're a freelancer and you lose all your clients, good luck."

In the last 18 months, Freelancers Union membership has grown by 86 percent, to roughly 130,000 members across the country. Its affordable coverage provides a critical safety net for freelancers, many of whom would otherwise be a medical emergency away from financial ruin.

President Obama has frequently said that "if you are among the hundreds of millions of Americans who already have health insurance through your job, or Medicare, or Medicaid, or the VA, nothing in this plan will require you or your employer to change the coverage or the doctor you have. . . . Let me repeat this: Nothing in our plan requires you to change what you have."

So why, then, is Freelancers Union founder Sara Horowitz angry at the Obama administration and Congress over the health-care proposals meandering through Washington?

While Congress and the Obama administration have taken a play from Horowitz's book in aiming to make it easier to pool resources and purchase less expensive coverage, they have absurdly excluded groups such as the Freelancers Union from being able to participate in these exchanges. In real-world terms, this means that Horowitz's group will have to forgo helpful subsidies if it wants to keep its existing coverage.

Time magazine predicted earlier this year that by 2019, up to 40 percent of the workforce will be independent contractors. Congress needs to recognize this reality and avoid undermining successful models like the Freelancers Union as it stitches together legislative priorities for health-care reform. Until then, I pray that my teeth don't send me to the poorhouse.